Bank loans for small and medium business under Jeremie program
Many of the Bulgarian banks have started to offer actively low-interest loans to the small and the medium sized business over the past months under the Jeremie initiative. According to most financial experts, this will have a positive impact over the local business and the banking sector in this country. Some of the financial institutions have been working under this initiative for over one year now. They offer cheaper financial resources and more alleviating conditions linked with the security of these loans. The funds are allotted to the micro, the small and the medium-sized enterprises, registered in Bulgaria. The resource comes from the Jeremie program under the “Development of the Competitiveness of the Bulgarian Economy 2013-2020” Operational Program.
The money under this initiative is provided by the European Investment Fund which supports the small and medium businesses in Europe and helps European companies have better and easier access to financial resources. Thus, the fund contributes to the achievement of the European goals with regard to innovations, research and development activities, entrepreneurship, economic growth and employment within the EU.
The Jeremie initiative (Joint European Resources for Micro to Medium Enterprises) offers the EU member states an opportunity to use some of the structural funds during a certain programming period. The money under this program does not reach the beneficiaries through the local administration, they are provided by financial intermediaries such as banks, risk capital funds, capital guarantee funds, etc. The main users of money under this initiative are the industrial factories, companies from the transport sector as well as retail trade and wholesale companies.
The initiative allows the business feel more confident and comfortable when operating with borrowed financial resource. The positive effect is linked with the price of the resource mainly- the interest rates are lower and all taxes and commissions due are twice lower than the average ones in the banking system. In other words, if companies use loans under 7%-8% interest rate in standard bank loans, the interest rate under the Jeremie initiative is around 3%-3.5%. This is so, because the financing under the Jeremie initiative is a joint one, between the European Commission and the relevant bank, participating in this initiative in Bulgaria. Due to the requirement for the raising of private capital in addition to the money coming from the EU under the program, which amount to some EUR 200 million, a private financing is also added to this sum. Thus, the total sum under the initiative reaches around EUR 600 million. This money will be allotted to the small and medium business in Bulgaria. The funds will be given to enterprises with personnel of up to 250 people and an annual turnover of EUR 50 million, or under. The program will continue until the end of 2015.
What are the main requirements of the Jeremie initiative towards companies?
The activity of the companies applying for money under Jeremie program should not fall under the following sectors: agriculture, manufacture and trade with tobacco and alcohol, primary manufacture of agricultural products, property deals, gambling, manufacture and trade with weapons and ammunition, fishery and aquacultures, purchase of transport vehicles, coal extraction and coal trading, financial activities. The finances under the Jeremie program can not be used for making expenditures, subsidized with state money or money from other EU programs, except for the “Competitiveness” OP. The money under the initiative can not be used for the restructuring of bank loans or expenditures of the beneficiary. The Bulgarian banks provide different financial resource under Jeremie program and the money allotted to one company could not exceed EUR 2 million (Leva 3.9 million). The liquidation term varies from 12 to 120 months. The financial institutions do not charge fees when liquidation is made ahead of schedule.
According to financial experts, Jeremie is a very good alternative of the traditional bank loans which have become less attractive due to the economic crisis, the high price of the resource and the cautiousness of the business. One and the same terms apply for all companies who want to use money under the Jeremie initiative. Each company which develops its business and has managed to stay in a sound financial state could receive funds under this program.
Source: http://bnr.bg/
(11.06.2013)